Investing.com - The dollar fell more than 1% against the euro and the yen on Friday as weak factory data from China added to concerns over slowing global growth and added to worries that the Federal Reserve may delay hiking interest rates.
Data on Friday showed that manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, exacerbating fears over a slowdown in the world’s second-largest economy.
The preliminary reading of the Caixin China manufacturing purchasing managers' index came in at 47.1, down from July's final reading of 47.8.
It was the weakest level since March 2009 and was well below the 50 level separating expansion from contraction.
The weak data underlined fears over the outlook for global growth and added to doubts over whether the U.S. central bank will hike interest rates next month.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
EUR/USD jumped 1.28% to 1.1383 in late trade, and the pair ended the week with gains of 2.55%, the strongest weekly performance since late April.
The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.
The preliminary reading of the euro area’s composite PMI, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.
USD/JPY was down 1.12% to 122.03 late Friday, the largest one-day decline in six weeks.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.
In recent months the dollar had been boosted by expectations that the improving U.S. economy would prompt the Fed to raise borrowing costs as soon as September.
But mounting uncertainty over the global growth outlook and the subdued U.S. inflation outlook has seen investors push back expectations for an initial rate hike to December.
In the week ahead, investors will be looking ahead to Wednesday’s data on U.S. durable goods orders for a fresh reading on the strength of the economy. A speech on Monday by Atlanta Fed President Dennis Lockhart will also be closely watched.
Revised data from both the U.S. and the U.K. on second quarter growth will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, August 24
Federal Reserve Bank of Atlanta President Dennis Lockhart is to speak; his comments will be closely watched.
Tuesday, August 25
New Zealand is to release data on inflation expectations.
Switzerland is to publish data on the employment level.
In the euro zone, the Ifo Institute is to report on German business climate.
The U.S. is to release private sector data on consumer confidence and a report on new home sales.
Wednesday, August 26
New Zealand is to release data on the trade balance.
Reserve Bank of Australia Governor Glenn Stevens is to speak at an event in Sydney.
Later in the day, the U.S. is to release data on durable goods orders.
Thursday, August 27
Australia is to report on private capital expenditure.
The U.S. is to release revised data on second quarter economic growth, as well as the weekly report on initial jobless claims and pending home sales.
Friday, August 28
Japan is to produce figures on household spending, inflation and retail sales.
In the euro zone, Germany and Spain are to publish preliminary data on consumer price inflation.
The U.K. is to release revised data on second quarter economic growth.
The U.S. is to round up the week with data on the goods trade balance, personal income and spending and revised data on consumer sentiment.